on November 25, 2013
I have been a climate scientist for more than 30 years, always staying away from voicing my opinion about policy issues. This book among other recent events has caused me to speak out more. The case for coal being the dominant cause of AGW is made convincingly in this book. Most other fixes are inconsequential. The various alternative approaches to dealing with the problem are explained clearly. Taxation of carbon via cap and trade or a direct tax is covered nicely. Another key principle often misunderstood by the public is discounting, again explained and illustrated well. This is a great book, clearly written and accessible to all who want to know more about the subject. I hope it is read by millions of caring citizens.
Gerald R. North
on November 8, 2013
Includes lots of good subject matter not covered thoroughly in his 2008 book, and elaborates on his earlier report of the DICE model projections (as far as I can tell).
Notes and Quotes:
(p. 10) "current low-carbon technologies cannot substitute for fossil fuels without a substantial penalty on carbon emissions," proof of this is in Chapter 23.
(p. 18) explains meaning of externality = "public good" (actually bad in this case, so he doesn't use this common econ lingo in book.)
(p. 21) Good log-linear plot (he calls it "ratio" scale) of global CO2 emissions since 1900, shows trend of 2.6% per year.
(p. 22) Nice plot of emissions/unit output, trend in US is -1.8% per year (from peak in 1920).
For US, says real output is 3.4% per year, so net emissions currently increasing at 1.6% per year.
For world, real is 3.7% BUT emissions only -1.1%, so for planet, emissions increasing at 2.6% per year (as Fig 2 showed).
(p. 71) Definition managed system. "From an economic point of view, decline and collapse (of some civilizations) came from narrowly based economic structures heavily dependent on unmanaged or mismanaged systems, with poor trade linkages to enable provisioning from other regions." (i.e., Anazazi, Easter Island).
(p. 82) "paradox" that "People will have substantially higher living standards in the growth world even after subtracting the damages from the changing climate." See Fig. 13. But note in unrestrained growth case temperature reaches nearly 6 C by 2200!
(p. 83-84) He states that food production can increase for local temps to +3 C (from now?) based on fourth IPCC report.
(p108) says 4% of population AND output are less than 10 meters, admits this "probably exaggerates" the risk
Good image of "fuzzy telescope" particularly for sea level rise.
Chap 11 covers "Wildlife and Species Loss" very well.
(p. 133), "80 percent of the underlying tree of life survived even when 95 percent of species were lost."
(p. 153) geoengineering by injecting aerosols cost 1/10 to 1/100 as much as reducing CO2 emissions for same cooling!
(p. 189) "Most research on long-term economic growth suggests that continued growth is a good bet. After all, the information and biotechnology revolutions have just begun. Moreover other countries can grow significantly just by catching up…"
Figure 29 (p. 207) Great explanation of minimum in total cost with no discounting. It's at 2.3 C. Fig 31 assumes limited participation and discounting at 4%, gets minimum at 4 C. Probably more realistic goal.
Table 8 (p 229) shows impact of carbon tax at $25 per ton is only increase of 11% on gas, 31% on electricity. Table 10 gives suggested rates versus year for US, 2015 at $25/ton costing 1% of GDP, 2030 at $53/ton equal to 1.25% of GDP
Chap 23 reviews alternative technology, says it will take carbon tax to force major phase out of existing coal and gas plants.
on November 3, 2013
This is Nordhaus' second attempt (after Question of Balance 2008) to write a popular book about the economics of climate change. The core message is the same: Climate change is a problem worth solving, but climate policy requires careful thought. Nordhaus has been saying this for 30 odd years. The book is not aimed at me but I enjoyed reading it. I think it is a good introduction to the intricacies of efficient and effective climate policy.
This is a useful survey of global warming from the very distinguished environmental economist William Nordhaus. To some extent, this book is a summary, aimed at a broad audience, of Nordhaus' extensive work on the economics of global warming. Nordhaus provides a "soup to nuts" survey. The book is divided into 5 sections. He opens with a solid section on the basic features of global warming, followed by a description of likely short-term impacts (short-term being essentially this century). The next two sections, and the heart of the book, are devoted to the economics of global warming. Part 3 looks at strategies for and costs of slowing global warming and Part 4 at the institutional changes needed to implement the required policies. The final section looks at the politics of global warming.
Nordhaus is particularly interested in introducing and explaining basic concepts of economics and data from what is now a large body of economically informed analysis. The co-author of a highly successful basic textbook, he is generally quite successful in this objective. Overall, I found this book to be clear, well organized, generally well written, and thoughtful. Its definitely superior to Nordhaus' last effort at public education.
Nordhaus presents global warming as a very serious but manageable problem, if appropriate actions are taken. Nordhaus argues well that, assuming economically efficient policies are implemented, major impacts of global warming can be reduced without enormous worldwide costs. He emphasizes that decarbonization through mitigation is the both the most effective and cost-effective approach, that a universal carbon tax or equivalent cap-and-trade system should be a cornerstone of policy, and that considerable investment in and subsidy of new technologies will be required, Much of his discussion contains some interesting detail. In an interesting analysis, he shows that extent of national participation has a bigger impact on projected cost-benefit analyses than discounting procedures. Similarly, while he strongly favors a carbon tax or cap-and-trade system as the basic policy instrument, he makes a strong case for complementary and well formulated regulatory measures. I particularly recommend Chapter 18 and Figures 29-32, which provide a nice framework for thinking about cost-benefit accounting in this context.
Despite these considerable positive features, there are some aspects of this book which may be bit misleading. While Nordhaus regards climate change as a grave danger, I suspect he is still somewhat too optismistic about climate change impacts. Some of his misplaced optimism may be due ot outdated data. The chapter on agricultural impacts paints a relatively rosy picture for short-term impacts but the most recent analyses are significantly more pessimistic. I don't think Nordhaus has really assimiliated the existence of long-term feedbacks (tipping points in his parlance) into his thinking. The threshold for these may well be lower than we expect and avoiding long-term disaster may well require more aggressive action now. For an interesting perspective on this issue, see a recent paper in PLoSOne by James Hansen and a group of distinguished colleagues. In this sense, the title of this book, The Climate Casino, is unfortunate. While some of Nordhaus' language indicates he feels otherwise, this title leaves the impression that there is a chance that we'll do OK if we do nothing. This is highly unlikely. Finally, on the highly contested issue of discounting future costs and benefits, I don't find his defense of his conventional opportunity cost accounting convincing.
The final section of the book, on politics, is probably the weakest, though Nordhaus has some interesting things to say about public opinion formation. He is, however, surprisingly naive about some aspects of politi.cs His advice to scientists who become engaged in global warming politics to keep saying the truth over and over again, and claims that this worked for tobacco control. Well, it worked to some extent in the USA but internationally, tobacco abuse continues to spread and present WHO estimates are about 5 million premature deaths per year to due to tobacco, hardly a major success. He also has an unfortunate, and increasingly common, piece of rhetoric in which he presents his very well grounded policy proposals as a "conservative" solution. Nordhaus is advocating an unprecedented international scheme of taxation with the goal of fundamentally changing our civilization's energy production system. This is conservative?
I'm at a loss to explain the four- and five-star reviews of "Climate Casino." I'm also unsure of the book's intended audience. Economists who are unfamiliar with the economics of climate change might learn from it, as would natural scientists who want to know more about how economists think about climate issues. However, it is definitely NOT a primer for non-scientists and non-economists.
The actual science of climate change gets only a few pages of text. The rest of the book is about economics -- and this material is badly handled. For one thing, the introduction of economic concepts such as externalities and discounting is rushed. For another, too many pages are devoted to hilariously speculative estimates of the economic impact of climate change in the late 21st century, as if economists have any ability to look 80 years into the future. Worst of all, the book glosses over the inability of economics to value non-market goods such as species and ecosystems -- which makes it impossible for economists to calculate the "return" on investments made to slow down climate change and mitigate its impact. Since one of the book's central assumptions is that environmental investments should pay the same return as other investments, we are left with a gaping hole in the argument.
To be fair, the book does drive home many good points, such as the urgent need to price carbon-use correctly and to wean ourselves from coal-fired power generation. The book also highlights the seeming paradox that economic growth simultaneously causes climate change yet provides the resources to mitigate its impact. But, at the end of the day, the toolkit of economics, though helpful with things like carbon taxes, has little to say on the basic question of how much warming and environmental destruction mankind should tolerate over the next century or two. At bottom, that is an ethical question. It is too big for economics to handle.
on April 9, 2014
This an easy to read introduction to climate change. Norhaus reviews the technical aspects and the policy history well. He makes a good case for some kind of carbon pricing to reduce greenhouse gas emissions. The book suffers from the tendency, perhaps common among economists, to discount the role of power in society. He comes to it near the end of the book, but it is unsatisfying. Also, he dismisses any role for government aside from the institution of a carbon tax. I agree this is an effective mechanism for fighting climate change, but other regulations and incentives are given short shrift in the discussion. Indeed, he can be so dismissive that his analysis suffers. Still, I use Climate Casino in a college classroom to discuss climate change and it is valuable as long as other readings or discussion can fill in the gaps and provide a more complete context.
on May 23, 2014
Sober analysis looking at data as economist and scientist is what is promised and delivered. The analogy of a casino is apt as he explains that there is still uncertainty in many elements of the the science and economics. What becomes very clear in this logical approach is that we're "throwing the dice" if we do nothing or not. But if we want the odds to be more in our favor, we better be looking very seriously at taxing carbon--like now.
I've read half a dozen books on climate change, this one is the one I chose for my book group, since it is clear, not idealogical and practical.
One part I liked: He explains how there have been many dis-information campaigns in the past, such as with the tobacco industry denying that smoking caused cancer. He shows the challenge we face now is much more immense, since the window for preventing much more costly adaptations is closing rapidly.
This book provides me the knowledge and language to speak out to my legislators and neighbors without sounding like an ideologue.
on August 5, 2014
Overall excellent book about climate change (generally) from an economist's point of view. I do have one correction and a few comments about where I disagree with the author. Overall these are nitpicks on an otherwise excellent book.
Page 37 (end of third paragraph) - The author states that to be "accurate" in converting from the centigrade scale to the Fahrenheit scale that "one needs to multiply by 9/5". This is partially correct. One needs to multiply by 9/5 AND then add 32. A simple example; zero degree centigrade times 9/5 + 32 = 32 degrees Fahrenheit. Doing it the way the author suggests is simply incorrect.
Pages 173-176 - The author is discussing cost reduction curves, one prepared bottom up by engineers and the other prepared top-down by economists. The author ultimately sides with the economist's curve (surprise, surprise, the author is an economist).
I (and others) believe that the engineer's curve reflects reality and is important (full disclosure: I graduated from an engineering school). For starters, just Google "McKinsey GHG abatement cost curve". You will get a multiple of references to a very informative and very very well known and cited curve that shows various costs for abating GHG's. Indeed, as the author concedes, there are negative cost abatements available. I'm a bit surprised that this (Mckinsey) curve is not even mentioned in the notes section in the back of the book that covers these pages.
The reality is that there is a very sizable amount of opportunity that has negative cost. It shows that it is financially advantageous to conserve energy in various ways. A simple example might be the exchanging an incandescent bulb for a LED bulb. The simple payback and/ or NPV, IRR, ROI etc all show that this is a great investment in most cases with the savings in energy costs making this a great investment.
If these negative cost options were few and far between or of minimal cost effectiveness then one could argue that they don't add up to much or have much incentive but the truth is that they are large and financially advantageous, worth doing even if no GHG's are minimized.
There is a non-trivially sized industry devoted to improving the energy efficiency of buildings, transportation and in other areas that has in fact found lots of negative cost GHG reduction opportunities. To ignore this reality may be convenient in some way for the author but it ignores a non-trivial reality that is in fact true worldwide.
The author states that we may not have the knowledge to find theses negative cost options (page 176, about 12 lines from the top). Phooey, we have plenty of acknowledged and proven knowledge (with a track record in) this area.
Lastly, the author states (page 176, 2nd paragraph) that the choice of which curve is the subject of heated debates. Maybe among economists but not among most of the rest of the world. The "engineer's curve" (as the author refers to it) reflects reality.
Page 249 - The author advocates a uniform cost for carbon across all countries in regards to international agreements. While there may be the advantages the author discusses in the book, I find this wholly unrealistic. There are reasons (i.e. the differences in the cost of land and labor) why things might have different prices in different places and I think it is unrealistic to think that this could not be the case in the future.
Page 260 - 261 - Similar to my comments on pages 173-176; There exist (today, not in the future) ways to lower carbon emissions through negative cost energy efficiency retrofits and the like. If they're negative cost then how is this not a good strategy (possibly in addition to others)!?
Page 262 (first paragraph) - The author discusses the installation of a "low-fuel furnace" for $500 more in capital and fuel costs over its lifetime than a non low-fuel alternative. I understand the possibly higher capital cost (more money for a more efficient furnace) but not why it would increase fuel cost. Wouldn't / shouldn't a "low-fuel furnace" decrease fuel costs?
Page 267 - The author's "best approach" is the movement by countries to a "high and rising cost of CO2". This might be effective but I doubt it is realistic to expect all countries to agree to this. OTOH, if I'm wrong and they do then I promise not to complain.
Climate change versus climate warming - The author discusses the use of these terms and seems to decide to use them fairly interchangeably. I disagree as in most cases the phrase "climate change" is more accurate.
on March 15, 2014
I think Prof. Nordhaus has given us a remarkable achievement: a solid, sobering, stimulating, scientific, scary book on human-caused global climate change, that leaves no room for doubt about the prospect that climate change deniers are going to sweat more, like the rest of us, in coming decades.
This is not a book about Apocalypse. If anything, the Sterling Professor of Economics at Yale University writes with an even temper and drily matter-of-fact language that is a teensy bit annoying, given the massively dangerous, initial impacts of climate change and global warming that are already unavoidable.
I think the principal value of The Climate Casino is that Nordhaus lays out the economic (cost/benefit) framework of policy considerations and possible remedial steps that the nations of the world, and mankind, can take to deal with the fact that we’re putting too much carbon dioxide into the atmosphere.
In simplest terms, he says there are many things we can do to mitigate global warming….some are more costly than others and some are very expensive….some folks and some companies and some countries will have to pay more of the costs than others.
I was surprised to read his conclusion that humans can likely survive the initial moderate impacts of global climate change/warming without substantial social and economic disruption, if we start seriously working on it now—there is a big pricetag, but we can tolerate it.
(I mention, for the record, that Nordhaus carefully discusses the unpredictable, and more than trivially possible, catastrophic “tipping points” in climate disruption that might occur regardless of what we do or don’t do—think Dennis Quaid and “The Day After Tomorrow”).
We’re going to have to stop using coal around the world, or figure out how to burn it cleanly. And more generally, we’re going to have to figure out how to require companies and individuals to pay the true cost of burning fossil fuels, that is, the present and future cost of the damage those fuels cause to our environment and to our grandchildren’s prospects for survival.
It was remotely heartening to read Nordhaus’ estimate that we have a reasonable chance of dealing with global warming if we get the ball rolling now, and make sure everyone pays the price.
This is the only planet our grandchildren will have to live on. We must do the right thing for them.
More on my blogs:
History: Bottom Lines
on January 12, 2014
I really enjoyed and learned a lot from this book. Nordhaus is a true giant in the field of climate change economics. It's well-written and comprehensive. I didn't give it 5 stars because I felt it dragged a bit at some points, but that was a reflection of my expectations, not of the subject matter - it's impossible to cover a subject as controversial as climate change in a thorough manner without referring to mounds of evidence. It's not casual bedtime reading, but the subject is important enough that I persisted, and I hope you will too. Please also read this thoughtful and detailed review from Paul Krugman in the New York Review of Books: [...]